I received disability insurance payments while I was off work on maternity leave. Do I have to claim it as income? I wasn't given the opportunity to have taxes withheld from the payments.

Disability income is generally treated as wages and thus must be recorded as income. A portion of them could be excluded it they were reimbursement for medical care.

Is unemployment income taxable?

Yes, unemployment income is taxed the same as wages.

How much income must I have before I have to file a return?

2008 Filing Requirements for Most Taxpayers

I just bought a house and performed sweat equity as a down payment. Is this taxable income?

It is not income. By the same token, it does not count toward the basis (cost) of your house either. It could increase the gain on the eventual sale of the property. However, under the current rules, most people can exclude the entire gain anyway.

We received a Restitution check for a class litigation settlement, and it had interest added. We didn't received a 1099. What do we have to claim on taxes?

It really depends what it was for. If it was compensation for personal injury then it is not taxable. If it was compensation for property damage then it could be income if the amount of cash received exceeds the amount that you paid for the property or if it exceeds the amount of damage that was done to the property. The interest will be taxable regardless.

Are student loans considered income?

Student loans are not considered income, as long as you are still bound to pay them back at some time. If at some point you were to be forgiven the debt, then the amount of the debt forgiven would be income.

I sold some land on a contract. A down payment was made at closing. Do I report the entire sale or only the amount of the down payment? If I only report the down payment, is it reported as income?

You need to report the sale as an installment sale on Form 6252. That form will help you determine the gain on the whole sale and then compute a "Gain percentage" that will represent the amount of the principal received each year that will need to be reported as income

I would consider royalty income from an invention to be subject to self-employment tax. Below is an excerpt from IRS publication 17 along the same lines.

Royalties Royalties from copyrights, patents, and oil, gas, and mineral properties are taxable as ordinary income. You generally report royalties on Part I of Schedule E (Form 1040). However, if you hold an operating oil, gas, or mineral interest or are in business as a self-employed writer, inventor, artist, etc., report your gross income and expenses on Schedule C or Schedule C–EZ (Form 1040). Copyrights and patents. Royalties from copyrights on literary, musical, or artistic works, and similar property, or from patents on inventions, are amounts paid to you for the right to use your work over a specified period of time. Royalties are generally based on the number of units sold, such as the number of books, tickets to a performance, or machines sold.

Five members of the same office win a $48,000 purse from a contest, agreeing that the prize would be split six ways. The check was made out to one person who had the responsibility of dividing the profit. What is the most equitable way to divide the money in terms of taxes? How does this person avoid showing an income of $48,000 come tax time when the profit was only $8,000 per person?

The only equitable way to do handle this from a tax standpoint is to have each person report his/her share of the prize on their return. The person who received the prize should provide a 1099 for each of the pool participants and to the IRS for their share of the prize.

As far as ways to minimize the tax bite, that will be dependent on each individual's circumstance. Take full advantage of the tax shelter on other sources, such as maximizing your retirement plan contributions.